Without Energy There is No Beer
The famous words of Tim Long, CEO, MillerCoors.In Irwindale, California, MillerCoors has taken solar to a whole new level.Over 10,000 solar panels [3.2 megawatts of capacity] will now enable the sun to drive production of seven million cases of beer per annum."When we formed MillerCoors six years ago, we had one goal: to create America’s best beer company. We knew it would require a team of great people dedicated to our heritage of brewing the highest quality beer. It would also take a commitment to sustainability because with great beer comes great responsibility. That is why we are committed to addressing key economic, environmental and social issues from the barley fields to our breweries, to the bar room." - MillerCoors Leadership Team.For my non beer-drinkers, MillerCoors is a joint venture between Molson Coors Brewing and SABMiller. Whenever you are enjoying a Miller High Life, Miller Genuine Draft, Coors, Coors Light, Molson Canadian, or a Miller Lite, think MillerCoors.THE DISRUPTIVE POWER OF SOLAR ENERGY:Here's the thing about solar. It's a technology. As such, efficiency and cost are inversely related. And it's pretty clear which one is on the rise.Solar is not a fad.Last week, BloombergBusiness published: "By the Time You Read This, They've Slapped a Solar Panel on Your Roof", in which Eric Roston detailed just how quickly solar installations are occurring in the United States.Every 150 seconds to be exact.A solar panel in itself is extremely low-cost, approximately 70 cents per watt, an entire 65% cheaper than the cost-per-panel five years ago. The real wallet burner is the solar generating facility. In other words, the panels need a home.For Big Box retailers with large flat roofs, solar is already an economic reality. What's a Big Box retailer? Think Walmart. In fact, Walmart happens to be the largest user of solar in the United States. Walmart has installed solar panels at over 300 U.S. stores, each installation providing approximately 25-50% of that store's electricity consumption.Does Walmart care about sustainability? Maybe. But transcending any desire to be a sustainable leader is the company's desire to be a low-cost provider. The solar decision for Walmart is economic.All-in costs for solar electricity have already reached grid parity through conventional sources. [Reminder: grid parity is a phenomenon that occurs when an alternative energy source has the ability to generate electricity at a levelized cost (LCoE) equivalent to, or cheaper than, the price of purchasing power from the electricity grid.]Here's the kicker. The costs are still on the decline. "Most scenarios fundamentally underestimate the role of solar power in future energy systems. In many cases, this can easily be explained by the use of outdated cost estimates for solar photovoltaics." - Agora Energiewende, German research group.Installations in Germany in January of 2015 averaged 8.7 cents per kilowatt hour and in sunny Dubai a contract was recently signed for 5 cents per kilowatt hour. Deserts and large roofs, such as the NFL Philadelphia Eagles Lincoln Financial Stadium, are ideal homes for solar panels. The solar panels at Lincoln stadium produce electricity during the off-season that is returned to the power grid. Impressively, the stadium actually produces 4x its annual use.You can expect to see an advent of installations in the next couple of years, as developers frantically rush to install prior to EOY 2016, when federal subsidiaries for large solar projects are set to decline from 30% to 10%.GEOGRAPHY MATTERS: WHERE IS THE SUNSHINE STATE?California is the King of Solar with an incredible capacity to power 600,000 homes. Arizona is a distant 2nd with 127,000 homes worth of capacity. Here's a paradox for you. Sunny Florida is lagging Northeast states such as Massachusetts, New Jersey, and New York. In fact, the Sunshine State has been ranked 18th on some lists in terms of solar installations. Strange? I thought so, too. The major cause is arcane and protective rules that prevent the buying and selling of power by any entity other than utilities. So, a mall owner cannot install panels and sell power to its tenants. The utilities claim there is too much cloud cover in Florida. Interesting. Tell that to the orange groves!WHY ISN'T THERE A SOLAR PANEL ON MY ROOF?Move immediately.Just kidding. There are a few reasons why most of us are still plugged into the conventional grid. The fact of the matter is that the sun does not always shine. Even if the sun is shining, most are at work, not at home using electricity. In contrast to Walmart who is enjoying its electricity all day long, house owners need the ability to sell power back to the grid during the day and buy power from the grid at night. State regulations vary as to the ease in doing just that.Yet, improvements in technology are enabling solar to achieve costs low enough to overcome any of the impediments the utility companies may throw your way.According to a July 2014 study conducted by McKinsey, the cost for U.S. residential consumers to install rooftop solar-photovoltaic systems has plunged from nearly $7 per watt in 2008 to approximately less than $4 in 2013. Keep in mind this is the cost of installation, not the grid-equivalent cost. A $4 installation cost per watt converts to a grid equivalent cost of roughly 9c per kWh. McKinsey cites one cause of the cost-plunge to be the drastic reduction in upstream costs (equipment). Module costs have declined nearly 30% every year since 2008. Module costs will continue to decrease, but the impending opportunity lies in downstream costs, such as financing, customer acquisition, regulatory incentives, and approvals. These "soft costs" collectively represent about half the expense of installing residential systems in the United States. The research put forth by McKinsey indicates that as soft costs become cheaper, the overall cost to consumers has the potential to reach $2.30 per watt by 2015 and $1.60 per watt by 2020.Importantly, McKinsey's conclusion is as follows: "These cost reductions will put solar within striking distance, in economic terms, of new construction for traditional power-generation technologies, such as coal, natural gas, and nuclear energy. That’s true not just for residential and commercial segments, where it is already cost competitive in many (though not all) geographies, but also, eventually, for industrial and wholesale markets."A FLEETING OPPORTUNITY FOR FIRST MOVERS:One thing is clear. Irrespective of industry, business has reached the point where companies can - if they move quickly - seek competitive advantages through commitment to sustainability.The Company Case Studies we have examined over the last year and a half portray just that. We see competitive advantages being exploited in the beverage industry. We see this in the cosmetics industry. In the sports industry. In the clothing industry. In the eyewear industry.Where is there untapped potential? The credit card industry [massive opportunity for first movers to offer a Green Credit Card!], the financial services industry, and the energy industry (oil) come quickly to mind.FIRST MOVER vs. BEST MOVER vs. Last MOVER:The following must be noted.MilerCoors was not the first company to install solar panels. Heineken installed 4,000 panels last October and Anheuser-Busch sports solar panels in both New Jersey and Nevada. Yet, MillerCoors has effectively installed the largest solar panel array to date.Why is this relevant? Sometimes being the best transcends being the first.Perhaps of even greater importance is the detriment that can occur from being last. The day that solar becomes so economical that companies failing to install are shunned by conscious consumers and hampered by high costs is no longer just a dream. The day that corporate implementation of a sustainable division and mission statements designed towards creating a greener future become so popular that less-profitable lagging companies become obsolete is no longer just a dream.It would be nice to be first.It would be great to be the best.But one thing is clear - you certainly do not want to be last.